VERIFYING A SUPPLIER’S TIERED PRICE QUOTATION
(Part I: QDA Specific)
© Frank Haluch 2011-2025
Buyers are never presented a tiered price quotation with unit prices that increase as quantities increase. That would be irrational. However, many quotations when examined using Quantity Discount Analysis (QDA) show IRRATIOAL PRICING.
The goal of QDA is:
The example below is an actual quote analysis using the SourcingApp tool. In Column 3, the quantity difference between orders is 500 and the unit cost is an astounding 13¢ each. A 96% reduction in price per unit.
Next, Column 4 shows the quantity difference between orders is 500 and unit cost is $3.70 MORE than the previous 500. A 2,846% increase in price per unit.
When the entire quote is analyzed a ROLLER COASTER PATTERN appears. This pattern SCREAMS IRRATIONAL PRICING, and an explanation is definitely required. This is the reason QDA needs to be the first analysis that is done when evaluating a tiered price quotation.
The next post will discuss range quantity QDAs and show the Lazy L pattern.
Sourcing is for Convergent Thinkers!
